[08.05.2ÎÎ4] Kyrgyzstan: posting a loss

By Jalil Saparov in Jalal-Abad, and Gulnura Toralieva and Ainagul Abdrakhmanova in Bishkek

The recent dismissal of the head of Kyrgyzstan's postal service signals the start of a belated attempt to address a cash crisis that threatens the existence of many newspapers.

Kyrgyz Pochtasy, the national postal service, has a monopoly on newspaper delivery in Kyrgyzstan, and is responsible for collecting subscription fees and passing them on to the owners.

But internal cashflow problems - and alleged mismanagement - have meant the company has run up large debts with a number of major publications, threatening to bankrupt them unless the problem is addressed soon.

Quite apart from its financial problems, Kyrgyz Pochtasy is accused of failing to deliver newspapers on time, or even at all.

Kyrgyzstan's deputy minister of transport and communication, Nurbek Turdukulov, told IWPR that the firing of Kyrgyz Pochtasy's director general Kalmurat Aidaraliev on April 28 is a sign of things to come, and that many more can expect to lose their jobs.

In the absence of advertisement revenues, most newspapers in Kyrgyzstan rely on subscription fees, paid via the postal service, for their survival. Subscriptions are the only source of income for Fergana, an independent newspaper in the south of the country, and even the state-run southern Akikat derives 80 per cent of its revenue from subscribers rather than kiosk sales.

Subscription payments should in theory be especially lucrative for the state-owned newspapers, given that government institutions are forced to maintain subscriptions. People employed in the public sector are also pressured to subscribe to them.

"If you do not subscribe, your salary will not be paid," a teacher at the Umetaliev secondary school in Aksy district told IWPR. "If you refuse to subscribe, you have to waste a lot of time doing it; it's such a hassle. You have queue up at the office of the head of the district education department, and prove why you do not want to subscribe. Otherwise, you have to go to the post office, subscribe to the newspapers, and submit the receipts to the district education department. Only after that can you get your salary."

But despite this apparently sure-fire way of keeping government-run papers in the black, they are still in trouble because the postal service is failing to pass on the subscription fees it collects. The huge debts that have built up jeopardize publications' ability to pay for overheads such as printing house bills.

"Theoretically, the money for subscriptions should be transferred in advance," said Aitygul Jakshylykova, chief accountant of the independent Aalam. "People subscribe for half a year and pay right away, but we receive the money month by month."

The postal service's debt of 190,000 soms, 4,400 US dollars, to Aalam is seen as a threat to its survival.

Toktorbek Janaliev, director of the independent Moya Stolitsa Novosti, told IWPR that as of the beginning of April, his newspaper was owed over 3,000 dollars for subscriptions.

"We create a product, a newspaper. They should distribute this product. They should sell as many as they take and return the money to us," he said. "The technical director of Kyrgyz Pochtasy claims that 'everything depends on the budget', but what does the budget have to do with this? We are still arguing about that, and bombarding them with letters, because they have an obligation to pass on this money."

The problem is longstanding - Kyrgyz newspapers have repeatedly lobbied the postal service for the last three years, but all attempts to recoup the funds have been unsuccessful.

In an interview published on April 9 in the newsletter Pravo Dlya Vsekh, Kadyrjan Mambetkulov, head of the Jalal-Abad branch of the postal service, revealed how bad things had got in the south of the republic.

"As of April 1, our debts to local newspapers were over 816,000 soms [19,000 dollars], which means it's an emergency situation," he said. "We hope we will be able to pay off at least 70 per cent of the total debts, provided we don't have other problems."

As Mambetkulov explained, the money is held up in the middle of an internal cashflow problem. The Jalal-Abad post office owes about 35,000 dollars, which the central postal service has lent it to cover previous losses, so it is in no position to find the full amount it owes the newspapers.

Managers at three local newspapers - the state-owned Akikat and Jalal-Abad Tongi and the independent Fergana - say the debts owed to them are mounting day by day.

Quite apart from its huge debts, Kyrgyz Pochtasy also fails on a practical level, often delivering newspapers late, or even not delivering them at all.

"We are forced to subscribe to newspapers that bring profits to the government. But the newspapers are not delivered on time. I only received two newspapers for 2003," said the teacher who was forced to subscribe before receiving her salary.

"This unit of the postal service does everything possible to make sure that newspapers do not reach the addressees," he said. "Very often, the management of the mainline transportation service 'forget' to send print media offensive to the government, or just refuse to mail newspapers to the regions."

Omurzakov recalled a case last year where he received a letter from the transport agency refusing outright to move consignments of Tribuna.

If political motives appear to be behind some of the delivery problems, poor business practice appears to be the major reason for the financial dispute.

"Kyrgyz Pochtasy does indeed have a large debt to the local newspapers," Turdukulov told IWPR. "The regional managers have not obeyed central management, which has led to financial irregularities; that is, misuse of funds."

Omurzakov agreed with this view. "They make newspapers go bankrupt because the postal managers want to lead a rich and a fanciful life," he said. "On Press Day, the president himself mentioned the financial violations that have occurred at Kyrgyz Pochtasy. Akaev stressed several times the negative side of the work of Kyrgyzstan's postal service. The main reason is abuse of funds."

IWPR approached Kyrgyz Pochtasy for a comment on the company's problems, but received a formulaic rejection. Nor was IWPR able to reach the firm's dismissed director general.

Deputy minister Turdukulov said the postal service was entirely to blame for its problems, and suggested that it was due for a root-and-branch overhaul.

"Everything comes back to the unscrupulousness of the postal workers," he said. "Therefore, in very near future everyone responsible for the current situation will be dismissed. We are planning to solve this problem immediately. The new director will have to come up with a program of urgent measures to be taken. We will probably take out a loan to eliminate the arrears."

Human rights activists have expressed concern that if the financial chaos is not resolved soon, the Kyrgyz print media could collapse.

"The danger is not so much the newspapers' financial problems as the fact that the public could be left without information," said activist Abdunazar Mamatislamov. "This problem is ubiquitous; it exists in all regions of the republic. If it is not solved, an information vacuum could appear. That's the most frightening thing."